The taxman goeth…

Attn: Political, business reporters

     In 2006, the top 1% of all American taxpayers had gross incomes of $388,800 or more. And the taxes they paid to the Internal Revenue Service amounted to almost 40% of the total amount of taxes that was paid by all taxpayers.

     In contrast, 50% of Americans with incomes under $32,000–while certainly more numerous than those at the top–accounted for slightly less than 3% of the total amount collected.

     For the wealthiest taxpayers, it was the largest share of taxes paid by the top 1% since 1986, the Joint Economic Committee said in a press release earlier this week.

     Taxpayers in the top 5%–those with adjusted gross incomes of at least $153,500–accounted for about 60% of the total tax collection.

     The committee’s press release confirmed what is common wisdom; namely, that wealthy people do pay the lion’s share of federal taxes, while the share paid by the unwealthy keeps dropping lower.

     The Joint Economic Committee is a curious congressional invention, consisting of 10 senators and 10 representatives with a chairmanship that rotates between the two legislative chambers. Its current chairman is Sen. Charles Schumer (D-N.Y.). But its Republican members, particularly Rep. Jim Saxton (R-N.J.), occasionally use the committee as a vehicle for churning out reports that undergird the party’s economic philosophy or to inject a dose of statistical realism into a political debate.

     This week’s report was no different, but neither the study nor Rep. Saxton’s comments about it contained any reference to the federal tax debate that’s has been occurring between Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) over who should be taxed and, more importantly, what percentage of the government’s cost they should pay.

     “In examining recent trends in the income share of the top 1%, what is most striking is its sharp rise during the 1990s,” Sexton said in the committee’s press release. “For example, between 1992 and 2000, the top 1%’s share of income jumped from 14.23% to 20.81%, and increase of nearly 7% before slipping in 2001 and 2002. These data show that the most significant increases in this income share occurred in the 1990s, not in more recent years.”

     Saxton’s interpretative comments drew a comparison between the tax policies of the Clinton Administration (1991-2000) and the Bush Administration’s opening years when tax cutting legislation was enacted. Now, with those tax cuts due to expire at the end of 2008, they have become part of the presidential election debate, and the source of some political embarrassment for Sen. McCain who opposed their enactment but now supports their extension.

     From the Joint Economic Committee: 

Percentiles ranked by AGI	Adjusted Gross Income Threshold on Percentiles	Percentage of Federal Personal Income Tax Paid
Top 1%	$388,806	39.89%
Top 5%	$153,542	60.14%
Top 10%	$108,904	70.79%
Top 25%	$64,702	86.27%
Top 50%	$31,987	97.01%